ECONOMICS

Detailed explanation-1: -What is the Cost Plus Method. As the name itself suggests, under the Cost Plus Method, Arm Length Price is determined by adding profit markup to the direct and indirect cost of production incurred with respect to goods transferred or service provided.

Detailed explanation-2: -What is Cost Plus Pricing? Cost Plus Pricing is a very simple pricing strategy where you decide how much extra you will charge for an item over the cost. For example, you may decide you want to sell pies for 10% more than the ingredients cost to make them. Your price would then be 110% of your cost.

Detailed explanation-3: -Transactional net margin method (TNMM) The TNMM is one of two transactional profit methods outlined by the OECD for determining transfer pricing. These types of methods assess the profits from particular controlled transactions.